Considered
and decided by Klaphake, Presiding Judge; Stoneburner,
Judge; and Huspeni, Judge.

S Y L L A B U S

Minn. Stat. § 481.13 (2002) confers jurisdiction on
the district court to establish an attorney lien on an arbitration award.

O P I N I O N

HUSPENI, Judge

Respondent, an attorney, moved the district court to establish an
attorney lien on funds to which the rights of appellant, his client, were then
being litigated and on funds appellant received from an arbitration award in a
federal action. The district court
established a lien for 24% of the arbitration award plus interest and ordered
that 24% of the funds still subject to litigation be held pending resolution of
the litigation. Appellant challenges
the award. Because we conclude that the
district court had jurisdiction to establish the lien under Minn. Stat.
§ 481.13 (2002) and established the lien in an appropriate amount, we
affirm.

FACTS

In 1999, appellant Gas Services, Inc.,
through its owner and sole agent Manjit Bajwa (collectively, Bajwa), hired attorney
Thomas A. Foster of Thomas A. Foster & Associates, Ltd. (collectively,
Foster), to represent it in an action in the federal district court of
Minnesota (the federal action) to recover about $2,000,000 from a Michigan
corporation, Howard Avista Energy (Howard).
While this action was pending, Northern States Power Company (NSP)
brought an interpleader action in Ramsey County District Court (the state
action) against Bajwa and Howard to determine which of them should receive
$600,000 held by NSP. Foster also
represented Bajwa in the state action, which was stayed pending resolution of
the federal action.

Five documents are relevant to the fee
dispute that resulted from Foster’s representation of Bajwa. The first, headed “Employment Agreement,”
was signed and dated by Foster on March 3, 1999, and by Bajwa on June 30,
1999. It provided for a 16% contingency
fee if the federal action was settled during discovery, 25% if it was settled
prior to trial, and 33% if it went to trial.

The second, headed “Agreement,” was signed
by both Bajwa and Foster on February 26, 2001.
It acknowledged that the federal action had been resolved through
arbitration and provided that the contingency fee would be 24% of the gross
award.

The third, headed “Agreement[:] Arbitration
of Attorney Fees,” was signed by both Bajwa and Foster on October 10,
2001. It provided that (1) their
attorney fee dispute would be submitted to a particular district court judge,
and if he declined to arbitrate, to another named district court judge; (2) the
agreement pertained only to GSI’s action against Howard, not to GSI’s action
against NSP, for which Foster was owed no fees; and (3) the arbitrator’s
decision would be binding and non-appealable.

The fourth, handwritten by Bajwa, dated
March 13, 2002, and signed by Bajwa and Foster, recited that (1) the
arbitrators in the underlying action had awarded GSI approximately $2.8
million; (2) the award had been vacated by the federal district court; (3)
Bajwa and Foster agreed that a major law firm should handle the appeal to the
Eighth Circuit; (4) Foster had an agreement whereby he would receive 24% of the
gross recovery, excluding the $600,000 recovered as the result of an
interpleader action brought by NSP; and (5) the parties had had a fee dispute
in August 2001 that they agreed to resolve by arbitration, but this agreement
resolved all past fee disputes. The
agreement provided that (1) Foster’s fee would be reduced from 24% to 12%; (2)
Foster would be responsible, but receive no additional fee, for collection,
further arbitration or trial, and release of the $600,000 in the NSP action;
and (3) Foster would handle, for a contingency fee of 33%, a further action
that GSI would bring against NSP.

The fifth document is a letter from Bajwa
to Foster dated April 5, 2002, stating:

[W]e had discussed your fee schedule as it
pertains to getting [one of two large law firms] to join us for legal
representation during [a]ppeal [to the Eighth Circuit]. We do not have either firm under
contract. . . .

You have reduced your fee in anticipation
of an agreement with one of these firms.
I contacted two other firms and they both refused to consider a
“contingency” arrangement. So, we are
not certain that we can find representation that will fit our need to pay on a
“contingency” basis. In short, we have
no agreement with a third party and no proposals either.

I am concerned that we will not have
adequate time to have another law firm prepare a “stellar brief.” Absent some good news next week, we may have
to go it alone on the [a]ppeal. If that
is the case, your fee will not have to be reduced because we were unable to
find legal representation that fit our financial criteria.

Foster represented Bajwa on appeal to the Eighth Circuit, which
resulted in Bajwa recovering $2,105,392.25.[1] But Foster did not represent Bajwa on his
appeal to the Eighth Circuit of the federal district court’s determination that
Howard could offset the $600,000 NSP receivable against its debt to GSI.[2]

Bajwa told Foster that Foster was entitled to 12% of the award,
pursuant to the agreement of March 13, 2002.
Bajwa also threatened to sue Foster for malpractice. On the advice of his malpractice insurer,
Foster then withdrew from representation of Bajwa. Foster then moved the Ramsey County District Court, which was
handling the NSP interpleader action, pursuant to both Minn. Stat. §
481.13 (2002) and the parties’ arbitration agreement, to establish a lien on
the $600,000 held by that court and on whatever funds Bajwa would recover in
the federal action and “for an order defining the rights and obligations” of
himself and Bajwa relative to his representation of Bajwa in both the federal
action and the state action.

The transcript of the hearing on Foster’s motion indicates that
Bajwa argued that the March 13, 2002 agreement, which provided a 12% fee for
Foster, governed, and Foster argued that the February 26, 2001 agreement,
providing a 24% fee, governed because Bajwa had not hired another law firm to
conduct the appeal and Foster had handled it.
Foster also relied on Bajwa’s letter of April 5, 2002, stating that,
because Bajwa had not been able to hire other counsel to handle the appeal,
Foster’s fee would not be reduced. The
transcript also shows that the district court was reluctant to act as an
arbitrator and that the parties agreed to accept the district court’s
decision.

Acting judicially rather than as an arbitrator, the district
court awarded Foster “24 percent of the $2,105,392.25 award, plus interest,
which was obtained in arbitration and was ultimately affirmed by the Eighth
Circuit Court of Appeals.” The district
court established an attorney’s lien for that amount and ordered that 24% of
the $600,000 be held pending resolution of the Eighth Circuit decision on
whether Howard could offset the $600,000 against the amount it owed Bajwa.

Did the district court have
jurisdiction to determine and establish attorney liens?

ANALYSIS

Bajwa argues first that the district court lacked subject-matter
jurisdiction because the fees Foster claimed resulted from the federal action,
not the state action. Questions of
subject-matter jurisdiction are reviewed de novo. Johnson v. Murray, 648 N.W.2d 664, 670 (Minn. 2002).

(b) An attorney has a lien for
compensation upon a judgment, whether there is a special express or implied
agreement as to compensation, or whether a lien is claimed for the reasonable
value of the services. . . .

(c) A lien provided by paragraphs
(a) and (b) may be established, and the amount of the lien determined,
summarily by the court under this paragraph on the application of the lien
claimant[.] . . .

Minn. Stat.
§ 481.13, subd. 1(c), was amended in 2002. 2002 Minn. Laws ch. 403, § 2. The amendment changed the phrase “The liens . . . may be
established, and the amount thereof determined, by the court, summarily, in the
action or proceeding,” to “A lien . . . may be established, and the amount of
the lien may be determined, summarily by the court under this paragraph.” We conclude that by changing the phrase “in
the action or proceeding,” to “by the court under this paragraph,” the
legislature intended that the statute henceforth would empower a court to establish
and determine liens without regard to whether or not the action or proceeding
in which the fees were incurred was before that court. Therefore, contrary to Bajwa’s argument, we
further conclude that the fact that Foster’s fees were incurred in a federal
court action does not bar state court jurisdiction under Minn. Stat.
§ 481.13 (2002).[4]

Bajwa argues in the
alternative that the district court lacked jurisdiction because of the parties’
October 10, 2001 arbitration agreement, in which they agreed to arbitrate their
fee dispute. But Bajwa himself drafted
the March 13, 2002 agreement, providing that the “[p]arties had a disagreement
about fees in August 2001 and agreed to resolve it via presenting the dispute
to [a particular district court judge] or other mutually agreeable Judge. This [March 13, 2002] agreement now resolves
all past disputes regarding fees between the parties.” The parties clearly intended their March 13,
2002 agreement to supercede the August 2001 agreement. Therefore, Bajwa’s argument that the
superceded arbitration agreement deprived the district court of jurisdiction is
specious at best.

Moreover,
Bajwa’s conduct at the hearing conveyed his willingness to have the district
court resolve the dispute. When the
district court said it might not be authorized to act as an arbitrator, Foster
said that, in that case, the district court should resolve the dispute under
Minn. Stat. § 481.13 and asked Bajwa if he agreed that the dispute should
be resolved one way or the other. Bajwa
said he wanted a resolution. The
district court then asked both parties if they agreed to his resolving the
dispute either by arbitration or, if that were not permitted, judicially. Again, Bajwa agreed.

Having
agreed at the hearing that the district court could resolve the dispute either
through arbitration or by addressing Foster’s Minn. Stat. § 481.13 motion,
Bajwa cannot argue now that some other judge must resolve it through
arbitration. A party may not consent to
a legal proceeding by participating in it and later challenge the validity of
the procedure, or take a position and later take a contradictory position on
appeal. See, e.g., Johnson v. Jensen,446 N.W.2d 664, 665-66 (Minn. 1989) (defendants who consented to trial of
plaintiffs’ entitlement to punitive damages could not contend on appeal that
plaintiff was limited to statutory damages); Wadena v. Bush, 305 Minn.
134, 147-48, 232 N.W.2d 753, 762 (1975) (party whose counsel waived objection
to evidence based on lack of foundation could not appeal on the basis of lack
of foundation); Am. States Ins. Co. v. Ankrum,651 N.W.2d 513,
522-23 (Minn. App. 2002) (party who acquiesced in submitting issue to jury
could not argue on appeal that issue should not have gone to jury); Texas
Commerce Bank v. Olson,416 N.W.2d 456, 462-63 (Minn. App. 1987)
(party that had not objected to untimely hearing date at scheduling could not
on appeal insist on strict compliance with timeliness rule); Voss v.
Duerscherl, 408 N.W.2d 161, 165 (Minn. App. 1987) (rejecting argument that
“directly contradicts the position [appellants] successfully took in the first
appeal of this case”), rev’d on other grounds, 425 N.W.2d 828 (Minn.
1988).

Importantly,
we recognize that litigants cannot by their agreement confer subject-matter
jurisdiction on a court where there is no independent basis for assuming
jurisdiction. No Power Line, Inc. v.
Minn. Envtl. Quality Council, 262 N.W.2d 312, 321 (Minn. 1977). Our interpretation of Minn. Stat. § 481.13,
however, provides the basis for jurisdiction.
Bajwa cannot now insist that the district court lacked jurisdiction and
that arbitration is the only possible resolution.

Finally, for the first time on
appeal, Bajwa argues that because Foster’s representation had been terminated
prior to the motion to establish an attorney lien, the district court erred in
awarding Foster the amount established in the parties’ contingency fee
agreement rather than awarding him the value of his services, quantum
meruit. Parties are bound, however, by
the arguments they make to the district court.
See Boatwright v. Budak, 625 N.W.2d 483, 489 (Minn. App. 2001)
(arguing under a different theory on appeal precludes review unless the court
chooses to review in the interests of justice), review denied (Minn.
July 24, 2001). A quantum meruit
argument was not made to the district court, and this court cannot consider
arguments not so presented. Thiele
v. Stich, 425 N.W.2d 580, 582 (Minn. 1988). Therefore, this argument is not properly before us.[5]

D E C I S I O N

Under Minn. Stat. § 481.13
(2002) the district court had jurisdiction to establish respondent’s attorney
lien on amounts appellant recovered and may recover from proceedings before a
federal court.

[1]See Gas Aggregation Servs., Inc. v. Howard Avista Energy, L.L.C., 319
F.3d 1060 (8th Cir. 2003) (reversing district court vacation of awards for
general trading account and loss of business, affirming vacation of award of
attorney fees, costs and interest, and noting that the district court’s
affirmance of the arbitration award of the $600,000 held by NSP was not
challenged on appeal).

[5]
In any event, the argument that the parties’ contingency fee agreement cannot
be used as the basis for Foster’s lien is without merit. Bajwa relies on Ashford v. Interstate
Trucking Corp., 524 N.W.2d 500 (Minn. App. 1994); In re L-tryptophan
Cases, 518 N.W.2d 616 (Minn. App. 1994); and Stall v. First Nat’l Bank,
375 N.W.2d 841 (Minn. App. 1985), to argue that “when a lawyer either quits or
is terminated before the representation is concluded, his fees are to be
determined by weighing several factors but not based on the uncompleted
contingent-fee agreement.” His reliance
is misplaced; all three cases are readily distinguishable. Moreover, Ashford holds that “The concept
of quantum meruit does not require that attorneys be paid on an hourly
basis. Such a rigid rule would not
allow due consideration to the relevant circumstances surrounding either a
discharge or a withdrawal.” 524 N.W.2d
at 503. The circumstances surrounding
Foster’s withdrawal are: (1) it was caused by Bajwa’s repeated threats of a
malpractice action; (2) it was advised by Foster’s malpractice insurer; and (3)
the Eighth Circuit had already issued its decision reinstating Bajwa’s
approximately $2,000,000 arbitration award, which had been obtained through
Foster’s efforts. Bajwa’s quantum
meruit argument is without merit.